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Page added on January 26, 2014

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Oil peak in North Dakota & Montana

Oil peak in North Dakota & Montana thumbnail

This is a guest post from Jean Laherrere. There are 12 graphs in this post. I have added a “continue reading” break in this post after the first three. I will do this for all long posts.

Laherrere 1

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peak oil barrel

7 Comments on "Oil peak in North Dakota & Montana"

  1. Plantagenet on Sun, 26th Jan 2014 7:16 pm 

    Laherre has made progress. Initially he ignored shale oil in his projections. Its taken a few years but he is finally taking it into account.

    His numbers look pretty good to me—-check out exhibit 2—-Bakken area production can continue to rise for another decade peaking at over twice current levels, and continuing to produce for decades into the future.

  2. Northwest Resident on Sun, 26th Jan 2014 7:47 pm 

    Those 2014 graphs (and text) are saying “Rapid and Substantial Decline in 2014”. Or am I not interpreting correctly?

  3. robertinget on Sun, 26th Jan 2014 8:24 pm 

    “Predictions are tough, especially in the future”

    Who’s to say companies won’t double down on drilling? Depletion SUBSIDIES or tax deductions work like this:

    from wikipedia

    Bryce gives an example in his book how the oil depreciation allowance works. “An oilman drills a well that costs $100,000. He finds a reservoir containing $10,000,000 worth of oil. The well produces $1 million worth of oil per year for ten years. In the very first year, thanks to the depletion allowance, the oilman could deduct 27.5 per cent, or $275,000, of that $1 million in income from his taxable income. Thus, in just one year, he’s deducted nearly three times his initial investment. But the depletion allowance continues to pay off. For each of the next nine years, he gets to continue taking the $275,000 depletion deduction. By the end of the tenth year, the oilman has deducted $2.75 million from his taxable income, even though his initial investment was only $100,000.”

    Here’s another article explaining depletion allowances…

    As we are getting this kind of straight up production followed by a slower but relentless decline, Plantagenet got it right, believe it or don’t.

  4. stevefromvirginia on Sun, 26th Jan 2014 8:38 pm 

    A herculean effort to produce a measly 1 million barrels per day. What comes next, after herculean?

    Left out is that none of these shale wells will become long-producing stripper wells. Instead, they will be sealed with cement then forgotten after a few years. Once the Bakken enterprise as a whole becomes unprofitable it will be abandoned, leaving North Dakota and Montana as industrial ruins … a landscape of beaten down towns and rutted roads, of rusted pipes, toxic waste, petroleum lakes, methane leaks, thousands of abandoned drill pads, contaminated water and nothing in the way of funds to remediate any of it.

  5. Mike999 on Sun, 26th Jan 2014 11:00 pm 

    Seal with cement?
    They want to just walk away, cement is expensive!

  6. GregT on Mon, 27th Jan 2014 3:45 am 

    Even if the Bakken could produce an extra 1MBPD by 2023 before going into terminal decline, it matters little.

    The decline in conventional oil by then will have already collapsed what is left of our economies. If we could manage to find more sources of FFs to offset the decline, our species would be committing suicide.

  7. shortonoil on Mon, 27th Jan 2014 5:37 pm 

    The area that even Laherrere seems to gloss over is that these wells are condensate, gas drive wells. They are essentially a pressurized vessel with a hole drilled in them. As they are produced their pressure, and temperature declines. Initially their pressure is about 2200 psi , with a temperature of about 450 deg F. As the gas in the well is removed their pressure, temperature falls, and the heavier fractions are the first to condense out of the gas. The heaver fractions come out first leaving the lighter (less valuable products) at the end. Ethane (C2H6) was selling for 50 cents per gallon yesterday, at Mont Belvieu, Texas.

    Even the best of the Bakken probably stops producing dodecane (Diesel) in less than a year (C12H26, boiling point at 1 atm. 421 deg F). As the wells mature their production becomes less valuable. The average Bakken well comes on line at 470 b/d and falls to 46 b/d after 5 years. The tail of that curve is mostly pentane, and lighter gasses. Shale oil is not only cursed with horrendous decline rates, it is plagued with declining product value. Taken over its full life cycle it will be found that they are uneconomical to operate.

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